Published in Print: June 8, 2011, as N.J. High Court's Funding Decision Leaves Few Satisfied

Updated: March 24, 2012

N.J. Funding Decision Leaves Few Satisfied

Members of the media question New Jersey Gov. Chris Christie last week after the New Jersey Supreme Court ordered the state to provide $500 million more to 31 urban districts in 2011-12 in order to fully fund its 2008 school-finance formula. Christie said he would comply with the court order only grudgingly, since it was based on a "failed legal and educational theory" that views spending as the key to school improvement.

A sharply divided New Jersey Supreme Court ruling that the state must provide more funding only to its 31 poorest urban school districts reinforced a controversial split in the way schools are funded in that state, and left lawmakers wrestling with how to meet their legal funding obligation to the rest of the public schools.

The May 24 ruling gave no one—except the poor urban districts—what they wanted.

Republican Gov. Chris Christie, who sought to rein in school spending, must now swallow a court mandate to spend more. Democratic lawmakers who wanted the court’s backing to send more money to suburban and rural schools must now figure out how to persuade colleagues to do so in a lean budget year. Lawyers for the 31 urban districts went home with a partial loaf, too, having lost their argument that scores of districts should get more money as well.

In its 3-2 decision, the state’s high court ordered New Jersey to provide $500 million more to those urban districts in the 2011-12 school year in order to fully fund its 2008 school finance formula. While scolding the state for “reneging” on its promise to fully fund the formula, the court declined to boost the amount to $1 billion in order to include 174 other districts that had been underfunded, saying that it could grant relief only to the 31 districts whose schoolchildren were plaintiffs in the case.

The ruling was the 21st in a 30-year-old lawsuit known as Abbott v. Burke, which established the principle that New Jersey’s high-poverty urban districts deserved extra funding. The state went to court in 2009 to argue that the Abbott distinctions had become unnecessary because a new weighted-funding formula funneled extra money to needy children regardless of where they live.

Trusting the state’s promise to fully fund the new formula—spelled out in the School Funding Reform Act—for at least three years, the court in 2009ruled it constitutional. But cuts to education funding sought by Gov. Christie, who took office in January 2010, left about one-third of the state’s 591 school districts $1.6 billion short of what the new law considered “adequate” in the 2010-11 school year. Lawyers for the Abbott districts returned to the court in January to ask for an order fully funding all districts.

Advocates who saw the new formula as an important way to ease school finance resentments based on geography saw the court’s decision as a step backward.

“The ruling threatens to resurrect the old suburban-urban ‘our-money-is-going-to-their-children’ split,” said Paul L. Tractenberg, a professor at Rutgers School of Law, in Newark, who helped bring the Abbott case. “Whatever deficiencies [the funding formula] had, it did unify all at-risk children in the state.”

Ruling’s Fallout

Unity is in short supply, however, as New Jersey figures out how it can fully fund the formula.

Gov. Christie said he would comply with the court order only grudgingly, since it was based on what he called a “failed legal and educational theory” that views spending as the key to school improvement. The governor, who has pledged not to raise taxes, said it was now up to the legislature to figure out how to come up with the $500 million ordered by the court.

Echoing the governor, Republican lawmakers have warned Democrats, who dominate both houses of the legislature, that they can’t rely on a tax hike to respond to the court order. And time is of the essence: By June 30, lawmakers must produce a response to the governor’s proposed $29.6 billion fiscal year 2012 budget.

The Senate minority leader, Tom Kean Jr., said in an email that spending more on schools is misguided, especially via a tax hike that would “pick the pockets” of taxpayers who already get too little for their money. Lawmakers should focus instead on options that “make the dollars we spend work more effectively,” such as putting caps on superintendents’ pay and compensating teachers based on merit rather than years of service, Sen. Kean said.

A Republican strategy memo, laid out in an email from Sen. Kean to his caucus on May 27 and obtained by the Associated Press, asks fellow GOP senators for feedback on a three-pronged education plan in the wake of the ruling. It would include supporting a constitutional amendment ending judicial interference in school funding decisions and giving the state wiggle room to reduce education funding in lean budget years.

Democrats, for their part, have their eye on bigger-than-expected tax revenues as a way to finance the court order and funnel additional money to the other districts that received less funding than the formula called for. New projections estimate that the state could see $500 million to $913 million more in income-tax revenues in the coming year than it had anticipated.

“Using the state’s windfall, we should provide additional funding for all inadequately funded districts across New Jersey,” Senate President Stephen M. Sweeney said in a statement.

But using the money for that purpose might not square with the aims of the governor, who has been seeking money for property-tax rebates and reinstatement of the state’s contribution to the public employees’ pension fund, which had been suspended.

“We want to do those things as well, and that’s a discussion we will have moving forward,” said Chris Donnelly, a spokesman for Sen. Sweeney and his fellow Democrats.

Pressuring Legislators

The lawyers who argued for a fully funded formula for all districts are now taking their case directly to lawmakers.

“They need to include money [in the fiscal 2012 budget] for the 31 urbans, but also fulfill their responsibility under the funding formula to make sure that all districts, particularly the 200 that were under [the] adequacy [level], are fully funded,” said David Sciarra, the lead lawyer on the Abbott case.

“It’s not as though there isn’t a funding law in effect here,” Mr. Sciarra said. “It’s the law they violated in the first place, and they’re legally bound to abide by it.”

In a case that never gained a high profile, the appellate division of the New Jersey Superior Court ruled in March 2008 that those high-poverty districts were inadequately funded. In arguing before that court, the state promised—as it would later in Abbott arguments—that its new funding law, known as SFRA, would remedy that problem.

Districts in that case, known as Bacon v. New Jersey, could use the state supreme court’s reasoning in the recent Abbott case to renew their contention that the state is obligated to fully fund the SFRA formula, said the lead attorney in the case, Frederick Jacob. But for now, he said, he is waiting to see how the legislature responds to the funding question.

Left Out

While such questions hang unanswered, low- and middle-income non-Abbott districts find themselves in a familiar position: struggling to make ends meet without a lot of property-tax wealth and without special state help that poor urban districts receive.

Louis DeLisio, the superintendent of the Fairview district, which serves 1,150 K-8 students in a blue-collar community in central New Jersey, said he’s tired of the funding roller coaster. In 2009, when SFRA was fully funded in its first year, the district got a $1 million boost in aid, only to lose nearly all of it the following year, forcing Mr. DeLisio to lay off five of his 90 teachers and raising class sizes at three of his four schools.

It’s not right that Abbott districts get more money simply because of urban poverty, when his district’s small-town poverty is just as severe, he said.

How Gov. Christie responds to legislative proposals to fund the formula will be closely watched. Democratic strategist Steve DeMicco said the governor’s position has weakened in the last couple of months, in the face of two polls that show his approval ratings declining and a redistricting battle that left Democrats in firm control of the legislature.

“I wouldn’t say he’s chastened, but he could be coming to grips with the reality that he’s going to have to work with this legislature,” Mr. DeMicco said.

Gov. Christie has an opportunity to build a consensus on education funding that has eluded other governors, he said, but it might be a stretch for him to square his brash style with a more cooperative approach to policy solutions.

“He might have to change his political persona,” Mr. DeMicco said. “He’s got to make some decisions about how he’s going to behave.”

PHOTO: New Jersey Gov. Chris Christie is questioned by reporters after the state supreme court's 3-2 decision requiring that the state increase its funding to low-income urban school districts by an estimated $500 million. The ruling was the latest in the state's long-running court battle over spending in poor schools, known as Abbott v. Burke. Gov. Christie said he would not defy the ruling, but called it legally faulty and bad policy.

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